At the end of 2009 Martel Co.'s had $410,000.00 in Account Receivable and a credit balance of $3,00 in Allowance for Bad Debts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience.
Assume that Martel Co.'s adjusting entry for bad debts expense on December 31 2009 was a debit to bad debt expense and a credit to Allowance for bad debts of $25,000.00
A) Estimate Martel's uncollectible accounts percentage based on its actual bad debts experience during the past two years.
B) Prepare the adjusting entry on December 31, 2009 for Martel Co.'s bad debt expenses.
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